Microsoft adds Azure to its billion dollar a year club

But getting people to think about its cloud services is still a challenge.

The Azure cloud computing platform is now a billion dollar a year business, Microsoft officials have told Bloomberg.

Azure now joins the ranks of the company's other products that bring in a billion or more dollars a year. Aside from the obvious trio of Windows, Windows Server, and Office, this list includes SQL Server, Exchange, SharePoint, Xbox, Visual Studio, Dynamics, System Center, and online advertising. At current revenue levels, Office 365 is also on track to turn over more than a billion dollars this year.

Amazon Web Services (AWS), by way of comparison, is estimated to have brought in $1.8 billion last year.

Microsoft has been steadily expanding the range of services offered under the Azure umbrella. Initially it was a Platform-as-a-Service offering, providing the ability to deploy applications onto Windows servers with maintenance of the operating system software handled automatically by Microsoft.

This has been expanded with the company releasing Infrastructure-as-a-Service support, allowing the use of custom virtual machines running operating systems of the customer's choosing. (That expansion happened earlier this month.) This new ability should make Azure a lot more competitive with AWS, which had IaaS as a core feature since its inception.

However, the company is still struggling to get its products recognized by cloud users. Bloomberg cited analyst James Staten at Forrester Research who claimed that Microsoft has failed to excite "front-line developers," particularly those at startups. Nonetheless, Staten believes that Redmond could double its Azure revenue over the next year.

The billion dollar revenue includes both direct Azure revenue, and revenue from services Microsoft sells to third parties to run their own Azure-like systems.

40 Reader Comments

As someone using bunch of Windows Azure features, this doesn't surprise me. The features they bring to the table are pretty awesome. For lots of developers at small shops, where contentious integration is a pipe dream, Azure brings it to the table without any headaches. If you need plain old VMs, then they are probably competitive with Amazon, but if you are building websites or cloud services, the tools you get are simply put, amazing.

SQL Azure is not much more expensive than dedicated SQL Server hosting for small databases, so it makes all the sense in the world for anyone on the .NET Web Stack to jump on the Azure band wagon. Plus, if you have MSDN, you get a good amount of Azure time/resources included.

I think Microsoft has really made some moves in the right direction in the last year or so. It wasn't that long ago that these Azure datacenters were supposedly barely getting any use. It appears that has changed. Microsoft is embracing nearly every web tech feasible(node, php, ruby, etc) which is really helping them.

I have to question the numbers, is it based on time/services bought, or actual funds received?

My company recently bought some time on Azure, but at a significant discount. We purchased $100k of time/services from Azure for the paltry sum of $18k. We're not the only ones either, with several other organisations paying usually 1/5th the actual cost.

I wouldnt be surprised if they're using the services sold number to inflate their presence, but it'd be rather deceptive nonetheless.

I have to question the numbers, is it based on time/services bought, or actual funds received?

My company recently bought some time on Azure, but at a significant discount. We purchased $100k of time/services from Azure for the paltry sum of $18k. We're not the only ones either, with several other organisations paying usually 1/5th the actual cost.

I wouldnt be surprised if they're using the services sold number to inflate their presence, but it'd be rather deceptive nonetheless.

Says 1bn in annual sales so I would assume it's going by revenue. I could be mistaken though.

The discount isn't really surprising. Seeing as discounts on recurring services/big purchases are quite popular. In many cases suppliers high balling prices and slowly floating down closer to a reasonable price.

Scott Guthrie's impact has been truly incredible. Azure was a bad joke before he got involved, now it's an extremely impressive platform. He should be running Microsoft.

Azure will probably never be the cloud platform of choice for startups, they're simply too adverse to Microsoft tech, but there's a huge market of regular software shops and engineers who have built their businesses and careers on Microsoft's platforms. They're going to need a path forward, and with Azure, Microsoft are now providing it. It may not be flashy, but it's a big potential source of dependable revenue.

The primary audience for Microsoft is not developers or startups. It is their installed base of server operating system and associated software in enterprise IT organizations. Microsoft was extremely successful with that business during much of the last decade. Their primary job is to move those customers onto Azure as those customers start to exploit cloud utilities for part of their IT work.

I've been trying out Azure for the last week b/c I need to get an Access db upscaled to SQL. In the past, I've always used to use ADP files to SQL Server. They're just so easy to use but MS is killing them off.It's really a neat platform but I'm finding performance when uploading to Azure is just miserable. There's some BulkInsert API that might help but I have to research it more. If it weren't for this one piece I would find it a lot more useful. They want you to make a C# .Net app but I think they forget not everyone is making Facebook. Some people just need a simple db with more storage than Access.

I've been trying out Azure for the last week b/c I need to get an Access db upscaled to SQL. In the past, I've always used to use ADP files to SQL Server. They're just so easy to use but MS is killing them off.It's really a neat platform but I'm finding performance when uploading to Azure is just miserable. There's some BulkInsert API that might help but I have to research it more. If it weren't for this one piece I would find it a lot more useful. They want you to make a C# .Net app but I think they forget not everyone is making Facebook. Some people just need a simple db with more storage than Access.

if you simply need access on steroids, SQL Express is the next step, not azure. Azure is for scaling out.

I've been trying out Azure for the last week b/c I need to get an Access db upscaled to SQL. In the past, I've always used to use ADP files to SQL Server. They're just so easy to use but MS is killing them off.It's really a neat platform but I'm finding performance when uploading to Azure is just miserable. There's some BulkInsert API that might help but I have to research it more. If it weren't for this one piece I would find it a lot more useful. They want you to make a C# .Net app but I think they forget not everyone is making Facebook. Some people just need a simple db with more storage than Access.

if you simply need access on steroids, SQL Express is the next step, not azure. Azure is for scaling out.

Probably what I'll wind up doing. Or jumping on an in house SQL Server. It's just that they advertise this as a solution. There's a demo and an upscale tool. Why put that out if that's not what they envision.

That $1Bn figure sounds meaningless to me. If it was $1Bn from external customers, then yes. But it isn't. It includes revenue from Windows Live / HotMail and probably a whole pile of other services like Windows Update as well. They could charge themselves whatever they please, and what they charge is probably more dependent on what they think looks best in marketing terms, ie whether they think Azure's profit looks better than HotMail's loss, for instance.

That $1Bn figure sounds meaningless to me. If it was $1Bn from external customers, then yes. But it isn't. It includes revenue from Windows Live / HotMail and probably a whole pile of other services like Windows Update as well. They could charge themselves whatever they please, and what they charge is probably more dependent on what they think looks best in marketing terms, ie whether they think Azure's profit looks better than HotMail's loss, for instance.

That $1Bn figure sounds meaningless to me. If it was $1Bn from external customers, then yes. But it isn't. It includes revenue from Windows Live / HotMail and probably a whole pile of other services like Windows Update as well. They could charge themselves whatever they please, and what they charge is probably more dependent on what they think looks best in marketing terms, ie whether they think Azure's profit looks better than HotMail's loss, for instance.

You're stating opinions like they are facts; Microsoft can't report "earnings" by charging itself to use its products (i.e. that's not revenue)... it's a publicly traded company and that will get them in VERY hot water with the FCC (as your stock price will rise or fall based on reported sales or earnings).

From the article:

Quote:

Microsoft now has another business division that generates over $1 billion in annual revenue. That division is the Windows Azure cloud service business, and that $1 billion number also includes sales of software for third party companies to create their own Windows-based cloud service.

As much as I like to see Microsoft doing great things with Azure, I'm still sad they don't provide a small free-plan for hobby projects which you only have to pay for if the user base is big enough. That's why I still prefer Appharbor.

Of course they give you a 90-days trial and 5gb free traffic, but at Appharbor you get:Unlimited projects for unlimited time, with- 500MHz Application exclusive- 1GB RAM- 100GB traffic/month fair use- piggyback sslfor free and custom hostnames for 10$/month.

The only thing missing is dedicated storage and if you use more than 512MB of db size you have to pay for that too. However, these limits are well enough for many small side projects with an easy option to scale up.This attracts developers

I don't work for appharbor btw, I just wanted to show what in my opinion Azure is still missing.

Azure will probably never be the cloud platform of choice for startups, they're simply too adverse to Microsoft tech, but there's a huge market of regular software shops and engineers who have built their businesses and careers on Microsoft's platforms. They're going to need a path forward, and with Azure, Microsoft are now providing it. It may not be flashy, but it's a big potential source of dependable revenue.

Despite the "Windows" branding, one of the best things (from a competitive standpoint) about Azure is that you don't have to go with Microsoft tech. You can get a Linux stack if you want.

As much as I like to see Microsoft doing great things with Azure, I'm still sad they don't provide a small free-plan for hobby projects which you only have to pay for if the user base is big enough. That's why I still prefer Appharbor.

Of course they give you a 90-days trial and 5gb free traffic, but at Appharbor you get:Unlimited projects for unlimited time, with- 500MHz Application exclusive- 1GB RAM- 100GB traffic/month fair use- piggyback sslfor free and custom hostnames for 10$/month.

The only thing missing is dedicated storage and if you use more than 512MB of db size you have to pay for that too. However, these limits are well enough for many small side projects with an easy option to scale up.This attracts developers

I don't work for appharbor btw, I just wanted to show what in my opinion Azure is still missing.

I actually totally agree with this. The no free option (no matter how limited it might be) makes it hard for people to experiment. I'd be more likely to recommend Azure to people if there was a free option for me to play with/demo with.

I actually totally agree with this. The no free option (no matter how limited it might be) makes it hard for people to experiment. I'd be more likely to recommend Azure to people if there was a free option for me to play with/demo with.

Except there *is* a free option, and its largely the same as AppHarbors.

Azure offers 10 free websites to anyone willing to signup for an account. Also there are spending limits in place so if you go for the 3 month trial you won't be billed until you remove the limit.

Oh... last Friday we had Microsofties at our university doing an Azure workshop. When I asked them if there is a free plan they told me that you will get a free tier for 90days and have to pay if you use more than that during the 90days as well as the full amount after the trial.So you say that it is possible to host 10 websites for free forever? Will the application be shut down for the rest of the month if the 750h (do you get 750h x 10 for 10 websites or 750 in total?) or the bandwidth is exceeded?

I wanted to save my 90 day trial for the summer and therefore didn't sign up yet...

So you say that it is possible to host 10 websites for free forever? Will the application be shut down for the rest of the month if the 750h (do you get 750h x 10 for 10 websites or 750 in total?) or the bandwidth is exceeded?

I wanted to save my 90 day trial for the summer and therefore didn't sign up yet...

Theres a free tier which isn't hour-based - so long as you do not switch from the "Free" website tier to the "Shared" one, and so long as you don't remove the spending limit on your account, you won't ever be charged - if your website exceeds the allowance then it will stop working for that billing period.

Theres a free tier which isn't hour-based - so long as you do not switch from the "Free" website tier to the "Shared" one, and so long as you don't remove the spending limit on your account, you won't ever be charged - if your website exceeds the allowance then it will stop working for that billing period.

Theres a free tier which isn't hour-based - so long as you do not switch from the "Free" website tier to the "Shared" one, and so long as you don't remove the spending limit on your account, you won't ever be charged - if your website exceeds the allowance then it will stop working for that billing period.

So there is still a way to go for Microsoft though they are already more generous than usual

There is also something going for Azure's enterprise level service (99.99% uptime, globally replicated and backed up). Microsoft have been dog-fooding for years (Hotmail | Xbox Live | Office 365 all runs on the same infrastructure as Azure) so they have a great reputation to carry with them.

I'm not saying that will be your reason for going with them, but just saying that is probably one of the reasons why a smaller / less well known company is going to be cheaper (because if they weren't, why on earth would you pick them?)

Also folks.. if you download the SDK. you get an Azure Compute and Storage emulator. You can write your cloud services app entirely in Visual Studio. Otherwise it's really no different than using IIS/SQL on the server version of Windows.

I've been trying out Azure for the last week b/c I need to get an Access db upscaled to SQL. In the past, I've always used to use ADP files to SQL Server. They're just so easy to use but MS is killing them off.It's really a neat platform but I'm finding performance when uploading to Azure is just miserable. There's some BulkInsert API that might help but I have to research it more. If it weren't for this one piece I would find it a lot more useful. They want you to make a C# .Net app but I think they forget not everyone is making Facebook. Some people just need a simple db with more storage than Access.

if you simply need access on steroids, SQL Express is the next step, not azure. Azure is for scaling out.

Probably what I'll wind up doing. Or jumping on an in house SQL Server. It's just that they advertise this as a solution. There's a demo and an upscale tool. Why put that out if that's not what they envision.

The upscale tool is to help you upscale any database (Access, SQL Server, SQL Server Express) to SQL Azure. If you are currently using the Access database for reporting, Azure isn't for you, but if you are running a small website off an Access database and you need to graduate up to SQL Server, the upscale tool helps you upscale directly into Azure, which is nice. I'm going to be using it myself soon for a moonlighting project actually that matches the scenario I just described

The primary audience for Microsoft is not developers or startups. It is their installed base of server operating system and associated software in enterprise IT organizations. Microsoft was extremely successful with that business during much of the last decade. Their primary job is to move those customers onto Azure as those customers start to exploit cloud utilities for part of their IT work.

Not surprised at this.

Microsoft has a dedicated sales team targeting enterprise IT. With good inroads there with their other services, selling Azure will be a natural extension. There simply aren't the profit margins with startups as with established operators, where bootstrapping is often employed to stretch scant resources...

At the risk of stating the obvious, it appears to be less a question of the cloud platform (which is capable and flexible) than of the development tools, environment, and skillsets (which are largely Windows-oriented).

For existing Windows developers, the pitch is something like "Use your Windows-oriented development skills on an AWS-like platform," which for those developers is exciting.

For developers coming to Azure from outside the Windows world, however, it's not a pitch but a question: "What do I know that's of any use on Azure?"

There is, of course, plenty that translates to Azure development from other platforms. But Azure has never positioned itself to come-as-you-are, while Amazon and Openstack have much more clearly established a position of working with a wide variety of development tools.

So if MS's goal with Azure is to open a pathway to cloud development for the legions of Windows developers, then it has a clear success on its hands. It may never rival the scale of other platforms, but if the point is to capture the development effort of existing Windows developers, relative scale is unimportant, so long as those developers don't jump ship to other platforms.

If, on the other hand, MS intends to displace Amazon or thwart budding Openstack development, it needs to capture the efforts of more than just Windows developers. And so long as so much of the SDK is Windows-oriented, it's going to have a very difficult time competing, not because of the platform, but because of the development tools. Folks who do unixy development are simply going to lose interest as soon as they see the words "Visual Studio," whether it's a genuine requirement for Azure development or not.

At the risk of stating the obvious, it appears to be less a question of the cloud platform (which is capable and flexible) than of the development tools, environment, and skillsets (which are largely Windows-oriented).

For existing Windows developers, the pitch is something like "Use your Windows-oriented development skills on an AWS-like platform," which for those developers is exciting.

For developers coming to Azure from outside the Windows world, however, it's not a pitch but a question: "What do I know that's of any use on Azure?"

There is, of course, plenty that translates to Azure development from other platforms. But Azure has never positioned itself to come-as-you-are, while Amazon and Openstack have much more clearly established a position of working with a wide variety of development tools.

So if MS's goal with Azure is to open a pathway to cloud development for the legions of Windows developers, then it has a clear success on its hands. It may never rival the scale of other platforms, but if the point is to capture the development effort of existing Windows developers, relative scale is unimportant, so long as those developers don't jump ship to other platforms.

If, on the other hand, MS intends to displace Amazon or thwart budding Openstack development, it needs to capture the efforts of more than just Windows developers. And so long as so much of the SDK is Windows-oriented, it's going to have a very difficult time competing, not because of the platform, but because of the development tools. Folks who do unixy development are simply going to lose interest as soon as they see the words "Visual Studio," whether it's a genuine requirement for Azure development or not.

Actually Azure is based off of HTTP. So any language you can form an HTTPS request/response in, you can use it with Azure. Right now 6 languages are supported, actually 7 if you include the limited C++ support. Also the source code is available for you to port it to your favorite language.

I have to question the numbers, is it based on time/services bought, or actual funds received?

My company recently bought some time on Azure, but at a significant discount. We purchased $100k of time/services from Azure for the paltry sum of $18k. We're not the only ones either, with several other organisations paying usually 1/5th the actual cost.

I wouldnt be surprised if they're using the services sold number to inflate their presence, but it'd be rather deceptive nonetheless.

I believe we are dismissing one very important group; Microsoft Partners. Microsoft has already enabled them to custom bill Office 365 for that collection of "cloud services" to their customers. Toss in their already significant investment in the Microsoft stack and you are looking at some real synergy here. Not just SME but also SMB which plays to two bases that Microsoft has always played to every chance they can get.